Toyota Monopoly Analysis

Kiichiro Toyoda found Toyota Motor Corporation on August 28th 1937. Kiichiro Toyoda is the father of the giant automotive industry, Toyota. The headquarters of Toyota is located in Toyota, Aichi Prefecture, Japan. Toyota Motor Corporation has manufacturing plants all around the world with a total of 32 countries consisting of Malaysia, Japan, America, China, Australia, Thailand, Singapore, Belgium, Bangladesh, Vietnam, Philippines, Pakistan, Indonesia, India, Taiwan, Egypt, South Africa, Kenya, Kazakhstan, Russia, U.K, Turkey, Portugal, Poland, France, Czech Republic, Venezuela, Mexico, Brazil, Argentina and Canada. As a giant in the automotive industry, the company consists 333,498 employees as from 31st March 2013(Toyota, 2013). The information

To begin with Toyota Motor Corporation’s market structure, we have to know that the automobile giant is an Oligopoly. Oligopoly means, “a market dominated by a small number of participants who are able to collectively exert control over supply and market prices” (Investorwords, 2013). The definition for market structure isThe interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from themarket(BusinessDictionary, 2013).The characteristic of oligopoly are few firms, moderate barrier to entry, price maker and so on. There are only few competitor of Toyota such as Honda, Nissan, Hyundai, KIA and Volkswagen. In addition, Toyota also is a price maker which they can easily make a decision to set a price without following the market price due to they have the largest proportion market share. Entry barriers help existing firms to exercise market control due to the government restrictions, copyright and patent issues. Thus, it is hard to develop a new car firm into the market (Mehta, 2013).In Malaysia, Toyota and two other brands Proton and Perodua control the automobile market. By looking at Figure 2., we can see that the market share of Toyota in 2011 is 15.1% according to Italia (2012). Toyota Motor Corporation is ranked 3rd on the market position with 15.1% which is relatively lower than the first two. Perodua is ranked 1st with 31.2%, followed by Proton with a market share of 26%. The competition for the top two spot seems hard for Toyota, however Toyota has a good advantage over the 4th rank brand, which is Honda with only 7.4% of the market